Sceptical about rebound in US housing starts

Published:
23 November 2007

US housing starts bounced 3% month-on-month in October to an annualised rate of 1.229m units, from a revised 1.193m (previously 1.191m) in September and well ahead of consensus at 1.170m (5%). On an actual basis, starts declined 15.5% yoy, an improvement on the -32.0% recorded in September and brings the ytd total to -24.2%. It is surprising to see a rebound in this dataset, as all other indicators point to a housing market that is still declining. Indeed, in conjunction with house starts yesterday building permits were released, which fell to an annualised pace of 1.178m (-6.6% mom) and behind consensus of 1.200m. This is the lowest total since July 2003 and would indicate that housing starts into 2008 will continue to be weak.

Following new orders falling 39% in the quarter (-40% in Q3, -37% in Q2 and -23% in Q1), homes closed falling 32% (-28% in Q3, -22% in Q2 and +3% in Q1) and the sales order backlog dropping 42% (-37% in Q3, -30% in Q2 and -20% in Q1), Analysts expects market conditions in 2008 to remain challenging. Source: Goodbody, Ireland